Laying the ground work to take its battle with Linux directly to Linux
customers, SCO Group said it has received U.S.
copyright registrations for its Unix System V and UnixWare source code, just the
firepower it needs to pursue copyright violation suits.

"SCO now has broad legal rights against end-users," Darl McBride, president and CEO of SCO, said Monday. "We intend to use these rights carefully and judiciously."

Until now, SCO's conflict with Linux, which it claims is an unauthorized
derivation of its Unix code, has centered on a breach of contract suit
aimed at IBM . But with the copyrights in hand, SCO said
using Linux is essentially software piracy, and it is ready to open a new
revenue stream by giving Linux users immunity to copyright violations
through licensing.

"Today is really the formalization of our going down the path of broadening our case to go beyond just contracts to include copyrights," McBride said. He added, "Today's announcement really is a new front that we're opening up."

The company said it plans to offer UnixWare licenses tailored to support
run-time, binary use of Linux for all commercial users of Linux based on
the 2.4.x and later versions of the Linux kernel. SCO said any commercial
Linux customers that purchase the license will be held harmless against
past copyright violations and for any future use of Linux in a run-only,
binary format.

"For several months, SCO has focused primarily on IBM's alleged Unix
contract violations and misappropriation of Unix source code," said Darl
McBride, president and CEO of SCO Group. "Today, we're stating that the
alleged actions of IBM and others have caused customers to use a tainted
product at SCO's expense. With more than 2.4 million Linux servers running
our software, and thousands more running Linux every day, we expect SCO to
be compensated for the benefits realized by tens of thousands of customers.
Though we possess broad legal rights, we plan to use these carefully and
judiciously."

The company is still establishing pricing on the new licenses, which McBride said will be available with volume licensing discounts.

"Since the year 2001, commercial Linux customers have been purchasing and
receiving software that includes misappropriated Unix software owned by
SCO," said Chris Sontag, senior vice president and general manager of
SCOsource, the company's intellectual property unit. "While using pirated
software is copyright infringement, our first choice in helping Linux
customers is to give them an option that will not disrupt their IT
infrastructures. We intend to provide them with choices to help them run
Linux in a legal and fully-paid for way."

The company said Linux's Symmetrical Multi-Processing (SMP) capabilities, which are essential to making Linux an enterprise-grade operating system,
are derived from Unix System V and its derivative works (like IBM's AIX). McBride claimed SCO has found three distinct areas of infringement:

Direct line-by-line code taken from SCO's Unix System V, which he noted made its way into Linux from various vendors, "primarily other than IBM"

Direct line-by-line code taken from derivations of Unix System V code, like IBM's AIX; McBride noted that its contracts with Unix vendors prevent those companies from donating any code based on or derived from the Unix System V kernel

Non-literal infringement which stems from code which borrows from the concepts and structure of Unix.

Despite speculation that some of the alleged infringing code may have come from BSD (at one point, System V code borrowed from 4.4BSD, removing attributions and copyrights), McBride said that is not the case.

"We're not talking about BSD code," he said. "We're talking about high-end SMP code that has been donated in the past year or two and has not made the rounds through BSD."

SCO said it will begin contacting companies regarding their use of Linux
this week, and give them the option of buying a UnixWare license. The company's stock price rocketed up about 15 percent, to $13.75 a share, in mid-morning trading after the licensing plan was unveiled.

SCO's crusade against Linux began with IBM. On March 6, the company sent a letter to IBM Chairman and CEO Sam Palmisano, warning him that IBM had allegedly breached its contract with SCO by contributing portions of its Unix-based AIX code to the open source movement, and by introducing concepts from Project Monterey, a joint effort by SCO and IBM to develop a 64-bit Unix-based operating system for Intel-based processing platforms, into Linux. IBM scrapped Project Monterey in May 2001.

But in the meantime, while maintaining that its problems were with IBM and the alleged violation of its contract, SCO has also been giving customers notice. In May, it sent a letter to some 1,350 companies that use Linux, warning them, "similar to analogous efforts underway in the music industry, we are prepared to take all actions necessary to stop the ongoing violation of our intellectual property or other rights."

It also issued a statement that "Linux is an unauthorized derivative of Unix and that legal liability for the use of Linux may extend to commercial users."

While the case against IBM is still in the initial phases, SCO has already terminated IBM's license for the AIX operating system. IBM maintains the license is perpetual and irrevocable, and continues selling AIX.

Unix Background
Unix was developed at AT&T's Bell Labs in 1969, but its history since then has been convoluted at best, leading experts like Open Source Initiative President Eric Raymond to delineate definitions for various operating systems that fall into the Unix family. Raymond uses "genetic Unix" to describe those operating systems which are derivative works of the original Bell Labs Unix.

Outside contributors, especially academics working from UC Berkeley and other institutions, supplied much of Unix's development after 1975, according to Raymond. Around 1980, Berkeley Unix hackers added Internet capability to the code base. By 1990, the relationship between AT&T's Unix Systems Laboratories (USL) and Berkeley had soured, leading to a three year lawsuit with a settlement that severed Berkeley's version of the Unix source, BSD, from AT&T. In 1992, the Unix trademark passed to the Open Group, a technical standards consortium which now maintains the Unix standard. Unices which adhere to and verify conformance with the standard are "trademark Unix" operating systems.

The Bell Labs code passed from AT&T to USL when AT&T spun it off in 1992 in a joint venture with Novell (the Unix trademark went to Open Group -- then known as X/Open -- as part of the deal). Novell bought AT&T's stake in USL in 1993. The property then passed from Novell to SCO in 1995. Meanwhile, the Unix universe had seen a birth of a number of other Unices, including:

AIX, IBM's Unix, a proprietary genetic and trademark Unix developed between 1987 and 1990

Solaris, the proprietary genetic and trademark Unix used by Sun Microsystems

SCO Open Server, SCO's version of Unix, a proprietary genetic and trademark Unix dating back to the early 1980s

BSD, an open source genetic Unix, but not a trademark Unix, which now has three variants of its own

Linux, an open source variant developed in Finland in 1991 which Raymond said is neither a genetic Unix nor a trademark Unix.

SCO added UnixWare, the brand name carried by later versions of Bell Labs' Unix, after it acquired it in 1995. In the meantime, to further muddy the picture, System V, the Unix that later evolved into UnixWare, borrowed from 4.4BSD, leading Berkeley to sue.

"It seems that from as far back as before 1985, the historical Bell Labs code base has been incorporating large amounts of software from the BSD sources," Raymond said in OSI's position paper on the SCO-vs.-IBM complaint. "The University's cause of action lay in the fact that AT&T, USL and Novell had routinely violated the terms of the BSD license by removing license attributions and copyrights."